The banks on the JSE have lost R86 billion of their market capitalisation on Friday morning as the markets react to the news of South Africa’s cabinet reshuffle.
Pravin Gordhan has been replaced as South Africa’s Finance Minister.
On Thursday evening, 30 March, the rumour mill started churning out news that the Presidency had fired an estimated 15 ministers. The drama unfolded live on ANN7 last night, shortly followed by eNCA and SABC News.
Pravin Gordhan has been replaced by the former Home Affairs Minister, Malusi Gigaba, as South Africa’s Finance Minister. The move signals a big jump for Gigaba from the security cluster to the economic cluster. However, Gordhan remains a member of the National Executive Committee.
Sfiso Buthelezi replaces Mcebisi Jonas as the new Deputy of Finance. Buthelezi joined the ANC in 1981. After being arrested, Buthelezi spent eight years on Robben Island where he completed a BCom degree. He served under the then Kwa-Zulu Natal Minister of Economic Development, Jacob Zuma, as an advisor. Buthelezi has bided his time in the finance committee with the DA calling him a “Zuma man”.
Jonas, on the other hand, blew the whistle on Gupta corruption and opened up about being offered a bribe by the family to keep quiet. Jonas is seen as a leftist with sound economic policies.
These new ministers are much younger than their predecessors and inherit the task of assuring investors and attracting capital from potential investors. Considering that South Africa has had four different Finance Ministers since 2014, their jobs do not appear easy.
It seems, according to political experts, that a credit rating downgrade is inevitable for South Africa. The President’s decision will most likely push the country into a recession with the poor being the most affected.
The Rand is expected to depreciate aggressively, even more than the 3% against the dollar that was seen on the evening of 30 March. Inflation will shoot up and poor economic growth is a certainty. South Africa’s expected GDP growth of 1%, may decline to 0,5%, if the country is lucky.
While Derek Hanekom is no longer a part of Cabinet, he is still the Head of the ANC’s Disciplinary Congress. Similarly, many of those cut are still members of the ANC.
Blade Nzimande, Aaron Motsoaledi, Bathabile Dlamini, Rob Davies and Faith Muthambi survived Zuma’s cut.
Gordhan was appointed as Finance Minister in 2009. After the 2014 elections he was made the Appointed Cooperative Governance Minister 2014. On 14 December 2015 he was reappointed as the Finance Minister. Rumours of his removal began on the eve of his 2016 Budget Speech and South Africans have been anticipating his removal ever since.
This move comes before the Gupta-Habib bank acquisition deadline on 31 March 2017.
Exactly a year has passed since the Constitutional Court declared that the President had failed in his responsibility and ordered him to pay back the public funds spent on his private Nkandla development.
Many interest-parties have reacted with resistance to Zuma’s latest move. There will be a push from the opposition to impeach Zuma and some media houses have suggested that a mass resignation in the ANC may take place. Only time will tell how the events from 30 March will pan out and how South Africa will be affected.
The Presidency’s Statement read as follows:
The changes bring some younger MPs and women into the National Executive in order to benefit from their energy, experience and expertise.
I have directed the new Ministers and Deputy Ministers to work tirelessly with their colleagues to bring about radical socio-economic transformation and to ensure that the promise of a better life for the poor and the working class becomes a reality. – Dalaine Krige
|Department Affected||New Appointment|
|Energy||Ms Mmamoloko “Nkensani” Kubayi|
|Transport||Mr Joe Maswanganyi|
|Finance||Mr Malusi Gigaba|
|Police||Mr Fikile Mbalula|
|Public Works||Mr Nathi Nhleko|
|Sports and Recreation||Mr Thembelani Nxesi|
|Tourism||Ms Tokozile Xasa|
|Public Service and Administration||Ms Faith Muthambi|
|Home Affairs||Prof Hlengiwe Mkhize|
|Communications||Ms Ayanda Dlodlo|